Vanessa Houlder has an excellent article in the FT this morning, which I think genuinely seeks to be objective on the offshore issue, and is published under the above, rather good, title.
She offers an immediate explanation for the flurry of activity from the Isle of Man on this site of late:
In the Victorian seaside town of Douglas, a new mood of uncertainty has punctured the customary ebullience of the Isle of Man's senior legal and financial officials as they fret about the loyalty of their most powerful neighbour. "If jettisoned by the UK, we will have to fight tooth and nail for our survival," says William Corlett, the island's attorney general.
Too true. But she then notes this is an issue beyond their control:
In Washington last month, finance ministers from the Group of 20 leading industrial and developing nations concluded that tax secrecy "should be vigorously addressed". This weekend, it was the turn of the developing countries. At a United Nations meeting on development in Doha, tax havens came under fire for fuelling capital flight.
She then asks:
Will it be different this time? If it is, what future is there for the small island and mountain countries that turned the dusty notions of privacy and opaque corporate architecture into lucrative national industries?
And quotes Jeffrey Owens in response:
"The political climate on the issue of tax havens has changed dramatically over the past three months," says Jeffrey Owens of the Paris-based Organisation for Economic Co-operation and Development. As the official who has driven the international crackdown on secrecy for more than a decade, he says the new climate could turn the reform promises extracted from many offshore centres into a reality. The financial crisis has intensified the attack on havens. The near-collapse of the west's banking industry has drastically increased governments' need to raise funds, brutally exposed the risks inherent in small countries with large financial sectors, and raised questions about the role of offshore centres in destabilising the system.
Before adding that:
The arrival of Barack Obama in the White House provokes even more anxiety for the havens. As well as launching last year's Stop Tax Haven Abuse Act, the president-elect helped this year to launch the Incorporation Transparency and Law Enforcement Assistance Act. This aims to make it easier for investigators to "see through" opaque corporate ownership structures and stop the flow of offshore funds to the US from hedge funds and private equity that are "of unknown origin" but do not have to pass money-laundering checks.
And as she say:
the prospect of a renewed crackdown on secrecy is jangling nerves ....[although]...in October.. Angel Gurr??a, OECD secretary-general ... called for "clear political recognition" of the half-dozen jurisdictions, such as the Isle of Man, that had taken "high political risk" in their move to greater transparency.
But even the most co-operative havens are only partially transparent. Information about private companies or trusts is not on public record. At best they will surrender information only to foreign tax inspectors who already have a "smoking gun" demonstrating evidence of wrongdoing. In practice, information exchange is rare.
I can agree with that. I hope my critics in the IoM will as well.
And as Vanessa notes:
Yet moving too far, too fast, might put the more co-operative tax havens at a competitive disadvantage. Wealthy individuals can be highly sensitive about financial privacy. Advisers at leading banks report that clients are already moving their money to Singapore and Switzerland - widely perceived as the last hold-outs against the international drive for transparency.
The danger of focusing solely on small players while ignoring similar shortcomings in some industrialised countries was one lesson of an OECD crackdown on secrecy launched in 1996. Tax havens have exploited this evident hypocrisy to stall reforms pending the introduction of a "level playing field". The success of the latest crackdown is likely to depend on the attitude of relatively powerful countries such as Switzerland and Singapore.
[T]he tax havens still fear a bleak future if the international firms of accountants, lawyers and bankers pull out. "They are birds of passage. If they up sticks and go somewhere else, unemployment would be dramatic," says one official.
The tiny states and protectorates that thrived in the free-wheeling second half of the 20th century are left struggling to shore up their defences against the coming storm. But as big countries try to block the leakage of much-needed tax revenues and stanch the flow of dirty money, sympathy for the tax havens is in short supply.
I know that's right.
And finally, it's good to note Vanessa reads this blog. She says:
Last month, Tax Justice Network, one of several campaign groups that have vigorously lobbied against havens, proclaimed the Indian Ocean island of Anjouan to be the "new kid on the block".
That was here. It's good to play a part in the process of change.
NB: With apologies to the FT for extensive quotation, it is a tribute to a good article at a seminal moment that is getting insufficient coverage.